Mission Grey Daily Brief - July 31, 2024
Summary of the Global Situation for Businesses and Investors
The world is witnessing a series of critical events that have significant implications for the global geopolitical landscape. From the US presidential race and its impact on foreign policy to violent protests in Bangladesh and the visit of India's Prime Minister to Ukraine, these developments are shaping international relations and creating new challenges and opportunities for businesses and investors. As always, Mission Grey is committed to providing insightful analysis to help our clients navigate these complex dynamics and make informed decisions.
US Presidential Race and Foreign Policy
The US presidential election is taking an unexpected turn with President Joe Biden's decision to drop out, following an assassination attempt on former President Donald Trump. Vice President Kamala Harris has emerged as the likely Democratic nominee, facing Trump and independent candidate Robert F. Kennedy Jr. Harris emphasizes diplomacy and multilateral engagement, while Trump's "America First" agenda prioritizes domestic issues and minimal foreign intervention. Kennedy promises a shift towards human rights and democracy. The outcome will have repercussions for global conflicts, especially in the South Caucasus region, where Armenia's security is at stake.
Turmoil in Bangladesh
Bangladesh is facing violent protests over a controversial court ruling on job quotas, resulting in the deaths of over 200 people and the arrest of 9,000. The international community has condemned the excessive force used, with the UN and human rights organizations urging the government to respect peaceful assembly. This crisis has also exposed the increasingly authoritarian tendencies of Prime Minister Sheikh Hasina's government, which has been in power for 15 years. The situation is of particular concern to neighboring India due to the shared border and the potential for unrest to spread, impacting regional stability.
Modi's Visit to Ukraine
Indian Prime Minister Narendra Modi's upcoming visit to Ukraine is a significant geopolitical move. It comes after Modi's meeting with Russian President Vladimir Putin and underscores India's growing geopolitical influence. This visit presents an opportunity for India to leverage its position and mediate the Ukraine-Russia conflict. However, Modi's embrace of Putin has been criticized by Ukrainian President Volodomyr Zelensky, complicating India's relations with Ukraine.
Vietnam-EU Relations
The European Union's foreign policy chief, Josep Borrell, offered Vietnam security support in the South China Sea, where Vietnam and China have conflicting boundary claims. The EU has a "direct interest" in maintaining peace in this crucial shipping waterway. Borrell proposed enhancing Vietnam's maritime security and cybersecurity capabilities. This development is part of Vietnam's efforts to diversify its security equipment sources and reduce its reliance on Russian military gear.
Risks and Opportunities
- US Presidential Election - The outcome of the US election will impact foreign policy, particularly in the South Caucasus region. A Trump victory may signal reduced US involvement in international conflicts, while a Harris administration could provide more robust diplomatic support. Kennedy's potential win introduces an unpredictable element, possibly increasing pressure on authoritarian regimes.
- Turmoil in Bangladesh - The ongoing crisis in Bangladesh poses risks to regional stability, especially for neighboring India. Businesses should monitor the situation and assess the potential impact on their operations, supply chains, and investments in the region.
- Modi's Visit to Ukraine - India's role in mediating the Ukraine-Russia conflict presents opportunities for businesses to explore new avenues for cooperation and influence regional stability. However, the delicate balance of India's relations with Russia and Ukraine should be carefully navigated.
- Vietnam-EU Relations - Vietnam's enhanced security capabilities through EU support may create opportunities for businesses in the maritime and cybersecurity sectors.
Further Reading:
Beyond borders: Armenia’s crossroads in the US election - Armenian Weekly
Donald Trump v Kamala Harris: what the polls say - The Economist
EU's Borrell Offers Vietnam Security Support on South China Sea - U.S. News & World Report
Haiti prime minister escapes unharmed after shots fired by gangs - Arab News
Themes around the World:
China dependency reshapes trade
Russia’s economic pivot has made China its dominant commercial lifeline, with bilateral trade reaching about $228 billion in 2025. Russia exported roughly $126 billion of raw materials and imported about $102 billion of goods, increasing exposure to Chinese pricing, finance and logistics leverage.
China Relationship Stabilisation Matters
Canberra is seeking a stable, productive relationship with China while remaining cautious on maritime security and strategic dependence. For business, this supports trade continuity in commodities and agriculture, but geopolitical frictions still leave exporters exposed to sudden restrictions or sentiment shocks.
Labor Shortages and Integration Gaps
Demographic pressure and skills shortages persist, but Germany is still struggling to convert migration into labor-market relief. Only 51% of early-arriving working-age Ukrainians were employed by mid-2025, underscoring continued constraints on staffing, productivity, and expansion across labor-intensive sectors.
Won Volatility and Inflation
The won recently fell to its weakest level since 2009, prompting market-stabilization measures, anti-speculation enforcement, and possible levy relief. At the same time, inflation has moved above 3%, increasing import costs, hedging needs, and uncertainty for foreign investors and sourcing operations.
Semiconductor ecosystem prioritisation
A new NITI Aayog report urges India to prioritise chip design, OSAT, advanced packaging, and compound semiconductors over costly leading-edge fabs, targeting a $120-150 billion semiconductor value chain by 2035 and shaping electronics, automotive, and industrial investment strategies.
Turkey Emerging Energy Transit Hub
Turkey is strengthening its role as a regional energy corridor through TANAP, TAP, TurkStream, BTC, and Ceyhan. New Turkey-Azerbaijan gas commitments totaling 33 bcm over 15 years from 2029 and planned power links could improve long-term energy access and logistics relevance.
Mercosur-EU Deal Advances Unevenly
The Mercosur-EU agreement has been provisionally applied since 1 May, lowering tariffs and opening quotas, but final approval may slip to late 2027 pending EU court review. Firms gain near-term trade openings, yet legal and political uncertainty still complicates long-term planning.
Tougher Russia Sanctions Enforcement
The UK expanded sanctions on Russian crypto, uranium, maritime services, and industrial inputs, targeting networks said to have processed over $90 billion. Businesses face heightened compliance, screening, and supply-chain due diligence requirements, especially in finance, energy, shipping, and dual-use trade.
AI Sovereignty and Digital Regulation
Canada’s new $2.3 billion AI strategy emphasizes sovereign compute, a public supercomputer and reduced dependence on foreign hyperscalers. The policy creates opportunities in data infrastructure and enterprise adoption, but also raises questions around regulation, procurement, cross-border data handling and tech market access.
AUKUS Reshapes Industrial Base
AUKUS is moving from planning to delivery, including in-service Virginia-class submarines, undersea drones, and local maintenance work. The programme, estimated up to US$235 billion over decades, will redirect capital, expand defence manufacturing, and raise security, skills, and procurement implications.
Tax Reform Transition Uncertainty
Brazil’s consumption-tax overhaul is moving into implementation with important rules still unsettled. Delays around CBS regulation, split payment design and selective-tax legislation are increasing legal ambiguity, forcing companies to revisit pricing, invoicing, contracts, systems upgrades and medium-term investment planning.
Energy Costs and Power Stress
Rising imported fuel costs, electricity adjustments and unresolved talks with Chinese CPEC power producers are keeping energy risk elevated. Inflation reached 11.7% in May, while fresh power charges, outages and grid constraints threaten manufacturing margins, operating continuity and pricing decisions.
EU FTA Acceleration Push
Bangkok is pressing to conclude a Thailand-EU free trade agreement, with a ninth negotiation round due in Brussels in June. Faster progress could improve tariff access, attract European manufacturers, and strengthen Thailand’s competitiveness against Vietnam and Malaysia.
Infrastructure and New Capital Continuity
Authorities insist Nusantara capital development is continuing via state budget, private investment and PPP schemes, alongside broader logistics and service buildout in East Kalimantan. For investors, this sustains construction and infrastructure opportunities, though funding execution and policy continuity still require monitoring.
Rupee Pressure And Capital Costs
Rupee weakness, higher global interest rates, softer foreign debt inflows and a wider current-account deficit are increasing financing risk. With reserves near $700 billion but external borrowing less attractive, businesses should prepare for currency volatility, costlier hedging and potentially tighter domestic monetary conditions.
Hormuz Shipping Disruption Risk
Iran’s leverage over the Strait of Hormuz remains the single biggest external business risk: the waterway normally carries about one-fifth of traded oil and gas, while vessel flows reportedly fell from over 100 daily to roughly two dozen during recent hostilities.
Tighter China Tech Export Controls
The U.S. is intensifying semiconductor enforcement, including proposed anti-smuggling measures targeting illicit chip flows to China. For multinationals, stricter licensing, compliance exposure, and retaliation risks will affect advanced manufacturing, AI deployment, customer access, and cross-border technology partnerships throughout global value chains.
Restrictive Skilled Immigration Changes
New USCIS guidance could force many green-card applicants to leave the United States and apply abroad, potentially affecting more than 500,000 annual in-country cases. Talent-intensive sectors may face hiring disruptions, visa uncertainty, family relocations, and weaker long-term access to skilled labor.
Water Stress and Industrial Resilience
Water scarcity is becoming a material operating risk in industrial regions. Business and policy forums are emphasizing reuse, treatment, and public-private infrastructure, while drought concerns shape project viability. Water constraints can delay expansion, increase compliance costs, and weaken manufacturing site attractiveness.
Shekel volatility and policy response
The shekel recently reached a 33-year high before partially reversing, reflecting shifting war sentiment and capital flows. Currency swings affect exporter margins, import prices, hedging costs, and investment returns, while the Bank of Israel’s 3.75% rate stance and market intervention shape financing conditions.
Réindustrialisation soutenue par l’État
La France intensifie son soutien à la modernisation industrielle via France 2030, illustré par 45 millions d’euros pour Goodyear sur un programme de 160 millions. Cela crée des opportunités d’investissement manufacturier, mais avec une dépendance accrue aux subventions et aux priorités politiques.
US-Brazil trade rebalancing pressures
Brazilian exports to the United States fell 16.7% year-on-year to US$10.9 billion in the first four months, while the bilateral deficit widened to US$1.3 billion. Industrial sectors including machinery, steel, wood products, and fuels remain especially exposed to shifting tariff conditions.
Strategic Balancing Supports Friendshoring
Hanoi continues balancing relations with both Washington and Beijing while positioning itself as a preferred manufacturing and friendshoring destination. This diplomatic flexibility supports investment inflows, but businesses must still monitor South China Sea tensions, U.S.-China rivalry and policy shifts affecting trade routes.
French and EU Investment Courtship
Thailand is actively courting French and broader European investment in alternative energy, aerospace, smart grids, AI infrastructure and data centres. Expanding bilateral partnerships could diversify capital inflows, upgrade technology transfer and strengthen Thailand’s role in higher-value regional supply chains.
Rare Earth Export Leverage
China’s licensing controls on seven heavy rare earths remain active, with exports of yttrium, dysprosium and terbium reportedly about 50% below pre-restriction levels. This keeps automotive, electronics, aerospace and defense supply chains exposed to delays, shortages and higher procurement costs.
Trade Routes and Shipping Stress
Regional conflict continues to pressure maritime and air connectivity serving Israel, particularly through the Red Sea and wider Eastern Mediterranean. Exporters and importers should expect higher freight, rerouting, delivery uncertainty and inventory-buffer requirements, especially for time-sensitive industrial and technology supply chains.
Housing Supply Shortfall Constrains Operations
Australia remains well short of its 1.2 million-home target, with estimates of a 220,000-home gap and vacancy rates near 1.5%. Persistent housing scarcity raises labour costs, complicates workforce attraction and increases pressure on project delivery in major business centres.
Foreign Investment Governance Reforms
Japan’s corporate governance story remains attractive, but proposed changes to shareholder proposal thresholds could alter investor influence dynamics. For foreign funds and strategic investors, governance reform still supports capital allocation, though activism channels may narrow and engagement strategies may need adjustment.
EU Animal Export Restrictions
The EU will bar Brazilian animal-product exports from 3 September unless Brasília proves compliance with antimicrobial controls. Beef, poultry, fish and honey are affected, with potential losses estimated between US$2 billion and US$5 billion annually across export chains and processing sectors.
Housing Pressures Affect Costs
Persistent housing shortages and cost-of-living strain are becoming a broader business risk, influencing labour mobility, wage expectations and consumer demand. Political pressure linked to housing is also feeding regulatory intervention and populist policy debate, complicating long-term investment planning.
Immigration Retrenchment and Labor Supply
Reduced immigration is reshaping labor availability and domestic demand. Canada’s population fell 0.2% in 2025, non-permanent residents dropped sharply, permanent immigration declined 19%, and study permits fell nearly 25%, tightening labor pools in services, construction, education and some export-oriented sectors.
Property Market Divergence and Weak Demand
Sydney and Melbourne prices are falling while Perth and Brisbane keep rising, reflecting uneven affordability, interest-rate sensitivity and supply constraints. This divergence affects site selection, labour mobility, retail demand, warehousing economics and exposure for banks, developers and consumer-facing businesses.
Administrative Reform Execution Risks
The government is centralizing power while overhauling the state apparatus, including major territorial consolidation and civil service cuts. These reforms may improve long-term efficiency, but near-term disruptions to licensing, approvals, enforcement, and local implementation could complicate market entry and project execution.
US Trade Pact Recalibration
India-US trade negotiations are near an interim pact, but tariff architecture remains unsettled after US legal changes. With India’s exports to the US at $87.3 billion in FY2025-26, outcomes will materially affect market access, sourcing economics, investment planning, and sector competitiveness.
Budget-Linked Policy Volatility
The June 5 federal budget is expected to exceed Rs17.8 trillion, with major allocations for debt servicing, defence and development. Ongoing debate over taxes, energy prices and business relief creates near-term policy uncertainty for pricing, capital allocation and market entry decisions.
Digital Regulation and US Friction
South Korea’s emerging AI and platform rules are becoming a bilateral trade issue with Washington, which fears discrimination against US firms. Companies in cloud, e-commerce, AI and digital services face higher compliance uncertainty as Seoul balances regulation, industrial policy and alliance management.